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Can I offset capital/other expenditure on a business against my PAYE tax bill?

  • 06-04-2012 12:38PM
    #1
    Denalihighway
    Registered Users, Registered Users 2 Posts: 1,077 ✭✭✭


    Howdy, hope I'm posting in the right place.

    I'm going into business, as such, in the next couple of months. Its music based, which will be releasing my own music (free initially but hoping to sell it in next year or too should I create a profile) but my end goal is to create a business in the soundtracks area.

    My question is, if I set this up as a business can I offset expenditure and losses for the music business against my PAYE tax bill?

    For example, I don't expect to be paid for what I do for the next couple of years but in the meantime I'll be shelling out a fair bit for all kinds of stuff like studio rent, capital expenditure, music and video production, promotion, hosting and domain costs etc etc.

    I believe I can quite easily visit the tax office after I've set up as a sole trader and register with 'dual tax status' as such?

    Thanks


Comments

  • #2
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    If you make a loss in your business then you can set this off against your PAYE income.

    Some of the expenditure you describe is capital in nature and you would have to claim capital allowances at 12.5% per annum rather then have it all allowable as revenue expenditure int he year of purchase.

    Kind Regards


    Dbran


  • #3
    JCYSHOW
    Registered Users, Registered Users 2 Posts: 18 ✭JCYSHOW


    In short yes you can off set current year trade losses against your current year PAYE income tax. If you dont or do not have enough PAYE paid to cover the losses, the losses are then carried forward to be claimed against any furure profits from the same trade only.

    You will need to register the trade to claim any losses. Use TR1 to register the trade with Revenue.
    You will be claiming the losses against PAYE on a Form 11/Form 11E. You are required to return one of these each year once you become an assessable person - basically once you have self employed income.

    Just bear in mind that there are certain rules in relation to calculating the losses, - you cannot claim capital expenditure as an expense but you do get a deduction in the form of capital allowances etc.
    There are also rules surrounding expenses incurred in relation to a trade before you commence to trade which might be applicable in your situation.

    Hope this helps.

    JCYSHOW

    (Started to write this before Dbran posted and went for lunch in the middle so never saw his post!!)


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